U.S. Oil Demand Is Peaking, Expect Lower Prices At Pump: Schork

Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Crude oil contracts are higher by nearly two on the NIMEX right now Here to tell us more about the oil complex is Stephen Shorky is the president of the Short Group. Joining us from Villanova, Pennsylvania. Stephen shork always a pleasure. Let's begin with news today about Saudi Arabia curbing output last month. This is according to OPEC delegates, and also the trade dispute that now has become political between Saudi

Arabia and Canada. What does this mean for oil prices? Well, if we're left just to the seasonality of it all him right now, oil demand in the United States, if it has not peaked for the year, it shall peak over the next couple of months, excuse me, a couple of weeks. That is to say so, we typically see the highest demand for crudal. At the peak of the summer,

we demand for gasolene is at its strongest. So as we transition into August, Now, of course we look ahead into September, we're not going to the shore, we're not going to the Poconos anymore. The kids are back at school, so demand for gasolene falls, and then demand for crudal

falls precipitously as we go into the fall maintenance season. Now, remember, the refinery is the only guy in the world that actually buys crudal to use it, and their consumption of crudal drops tremendously in the months of September and October. And based on the published UH schedules for maintenance coming this fall, this maintenance season will be extraordinarily high. So we can expect to see a sharp drop off in demand for crude all in the months ahead. So what

does this mean for price? Well, intuitively, if you're at the peak of the season and we're already well off prices, that is, are already well off their highs and we're only looking at weakening demand in the months ahead, that would imply lower prices in the nearby future. Okay, So does this mean that the best trade is to play on investors fears of increased prices. That's going the other way,

that's the contrary bet. Make sure that you could stick it to an investor to pay sixty nine to seventy dollars a barrel when the price, based on what you just described, looks like it's going to fall right exactly, So we did. We came out of the worst worst of it, and and I think on investor's mind, what was really not focused on was the loss of Canadian crude oil. Uh, the market seem to be really focused, of course on the situation in Iran, the situation in Venezuela,

the situation in Libya. But we had a major upgrader, a production plant in Calgary that went down for an unplanned outage back in the late spring, right as we were going into the peak demand season for oil. And keep in mind, demand for oil, demand for guests lane in the United States has never been stronger. And yet we lost a key supplier of that oil at the start of the season, and hence we did have a

sharp run upping price. But the market has endured that right now, so prices at this level from a fundamental from the seasonality standpoint, you would expect to see lower prices, a softening in prices as it wore. But clearly with the headlines the reported assassination attempt down in Venezuela. Of course, the situation between this White House and Tehran, the situation in um in Libya, all plays into fear. And when you have in fear in the market, that fear gets

priced in as a premium into the market. So there there is that still continue to overhang in this market. Okay, So if you're a driver and you're looking to put the gasoline or fuel in your automobile, should you expect prices to remain stable or at least lower going into the fall? Well going fall, we have to keep in mind, the investor listeners here has to keep in mind that come September fifteen, the rules begin to change with the

type of gasolene that we put into our cars. And then that that transitions again in the month of October and once again in November, as you transition from a summer grade gasolene to quote unquote a winter grade gasolene now winter grade gasolene. Given the amount of chemical feedstocks to go into manufacturer, they're plentiful, so the manufacturer where the grade gasolene is a cheaper proposition. So inherently we

are going to see lower oil prices. We're going to gasolene prices because of the transition for the types of gasolene that are going into the refinery, uh coming out of the refiner, I should say. So that's at him. I would expect to see lower prices because let's keep in mind, as you said, at the beginning of the summer, when demand was at all time high, we lost access

to a lot of crude oil. We we've withstood that, and now we're going to a weak demand part of the year when we're manufacturing a cheaper gasoline going into that uh uh time frame. So I think at worst expect prices, you know, a slow, steady decline. But but certainly I would expect to see you're going to see a decline. That's just economically a truth that we'll see it over the next couple of months. All Right, I

want you to put oil to the side. For gasoline to the side, I want you to talk about liquefied natural gas and the potential Chinese tariffs on l en g imports. Yeah, that that was a big surprise. Of course, China has identified US energy imports as tariffs, but they they had left out ellen G and I say that as a surprise, and I think it is catching the market a little bit off guard, given that China is in a massive transition to wean itself off of coal onto gas, and it's been a major buyer of l

en G cargoes over the past year. Some estimates now have China as the world's largest buyer of l n G. Uh. So this was a surprise. I am skeptical China's making this threat. I am skeptical because we are we are coming out of the summer, which means we're going into the fall, and we're going into the peak demand season for Chinese gas consumption the winter. And the flexibility that us LG has it uh the cargoes can easily go into China. And this is what we saw last year.

And when you have excess demand in the Chinese market, it was the us LG that fit that gap because of its flexibility. We gotta leave it there. Stephen Short is the president of the Short Group. He's based in Villanova, Pennsylvan and he's talking crude and liquefied natural gas. Right now, let's talk about CBS and the decline in the value of CBS shares since the accusations of sexual harassment against the CBS chief executive less Moonvest. Here to help us

understand what's going on, is Tuna a MOBI. He is the senior media and entertainment analysts for cf R Research. Tuna always a pleasure. I was looking at the price of CBS stock and all right, fifty two bucks to share. But the decline since the revelation of these accusations against less Moonvest. Do you believe that that is really what is hurting the style? PIM? First off, good morning, Thanks

for having me. Um. Absolutely, I think um. I think it does create an overhang on the stock, which is kind of why we downgraded it shares um from it by to a hold. Um. It's a little bit disappointing PIM that the company chose to conduct business as usual and the last earnings call as if wishing that the matter of the ongoing investigation will will just go away.

But there is no questionably a cloud of overhang as a results of this on for investigation, and we think that as long as that cloud does not get resolved in a substantive manner that investors should tread cautiously even as the company has demonstrated continued strong fundamentals here. So we are cautiously, um, you know, waiting for the uh kind of the substance, and and based on that, we just think it's uh, it's prudent to to not add to current positions. Okay, but let me ask you a

little bit. If indeed the company is doing well. We got the results last week. They're over the top business, exceeding estimates. They're adding subscribers at an accelerated rate. Their retransmission fees are also higher. Why wouldn't this be a good opportunity to buy a stock that's trading at fifty two that maybe just about let's say the middle of July, was trading nearly sixty dollars To share the simple answer, pay me that Less move is an integral part of

the investments here. And there's a lot of investors that we speak to that actually brought into CBS precisely because Less and his team have demonstrated division to execute on that course strategy that you just alluded to. Growth in um, you know, non traditional revenue streams, whether it's UH streaming or content licensing UM over the time up you know, things of that nature retransmission. So I think the fundamentals definitely UM are very healthy, as you have alluded to.

But right now I think, uh, there's a real uh some likelihood that some of the sharehold the value uh that Less Movements has created over the last decades, some of that could be uh eroded in the event that he could, you know, potentially be found uh uh you know somewhat complexity or even if should he leave. And remember there's still the issue of the potential merger with Votcom, which National Amusements is pushing uh and the litigation that

is pending in that regard also creates an overhanging. There's a lot of CBS investors who would not like to see that merger happened. And to the extent that you know less who is the chief opponent of that marger to the extent that he's displaced, I think bringing together the two companies could also read some questions in the minds of CBS investors as to whether at is in fact something that will uh grow share all the value over the long term. Well to know I'm glad you

mentioned Viacom. They're going to be reporting their results on Thursday before the market opens. What do you expect so CEO Robert Bakish. I think he's on on the on the good path, right. So he's articulated his vision to focus on the flagship brands, and we are actually encouraged by by some of the strides that have been made under his tenure. Um, you know, we're seeing some stabilization in the ratings that a Nickelodeon and and and MTV and v h one. Uh, there's still some challenges there,

to be sure. At the Paramount Studio, I think we actually have been encouraged by a stemming of of the the the challenges that they've faced over the last several years where they've on the performed uh the other Hollywood studios. So I think there's also progress there in terms of the turnaround strategy. But we do expect to your question that there's still some underlying issues with maintaining some operating

consistency on the advertising side. Uh. The company is still somewhat I think disadvantaged in this highly consolidated landscape where I think you see more uh, the bigger scale becomes even more important, which is why I think the merger with CBS is arguably much more crucial for Vatcom compared to CBS. Let's talk about another merger. Tell us about Disney and Century Fox. We get Disney results tomorrow after the close. The shares right now hitting a new fifty

two week hi. The stock is up seven and a half percent this year. Correct. We are still very bullish on the shares of Disney. Withink the the the deal with Fox which just got approved by shareholders recently. I think that sets the company up very nicely to execute on its direct to consumer strategy as well as the

advantages of scale. But I think, um, you know, the elephant in the room here is going to be how potentially h you know, Fox reacts to the bid for for Sky, which, as you know, Comcast have loved a much higher bid, and I think Fox has on until Thursday too to beat that offer. I I do believe that there's a very good chance that Fox can come back with a higher offer for uh First Sky, which

could escalate the bid in war. And remember now that Disney has an agreement in place, there's also the likelihood we think that Disney could actually leap frog and make a food beat for Sky. So there's all kinds of moving parts here that will determine how, you know, the Sky UH issue gets resolved, and I think that's probably going to UH overshadow the results of these companies that

have coming up in the next couple of days or so. Well, Century Fox reports on Wednesday just after the market closes. What do you think comcasts UH strategic response will be if they are not successful, as it looks as though they will not be Fox, I wouldn't rule them out

as a matter of fact, Team. I would not even say that they would not be successful, because I think they made it pretty clear when they backed out of the you know, of the chase for Fox that UM Sky is now They're still focused, and I do believe that's a real chance that they could come back yet with a high offers. Should Disney and or Fox decide to UH to top camp Comcast offer on the table,

I mean, Sky is an extremely strategic asset. We still think that Sky is probably on balanced the better match for Comcast rather than Disney, but I think expect both companies to go all out because I think the Sky assets are very unique skies as much as as as a bona fide content provider as it is is a satellite TV distributor, and the the most recent pact that they just signed with the Premierly was very very compelling, which makes it all the more valuable asset. Thanks very much.

Tuna Amobi, Senior Media Entertainment Analysts at c f r A Research. What do the company's compona Arbor, how Arbor, Holmes and Westwood Meets and Bound having common? They're all companies that Warren Buffetts Berkshire Hathaway has acquired this year, and while the names may not be familiar, that's probably

because they were not multibillion dollar deals. So here to tell us what Warren Buffett and Berkshire Hathaway are going to do with a hundred and eleven billion dollars worth of cash Our own Tara La Chappelle, Boomberg opinion columnist, Tara always a pleasure. Thanks for coming in, uh and I just want to note to follow Tara on Twitter just to go to at Tara lash L a c h Alright, Tara lash what what kind of acquisition does Warm Buffett need to make in order to really move

the needle at Berkshire Hathaway. Well, their cash is over a hundred billion dollars, which has been the case for a while now. I mean, obviously they need a big deal. I think the challenge has been, you know, the same over the past year, which is that everything is very expensive compared to what a warm Buffett would like to

pay for deals. And I don't know if he just bites the bullet and does something outside of evaluation he's comfortable with, I don't know if that makes sense, or does he finally give in and think about doing buy backs, which I think is something investors are becoming more open to as well, probably more so than the idea that's been floated around of them paying a one time dividend. Now, as I noted in the introduction, I mean, and I was kind of kidding because, I mean I had never

heard of half of these companies. But uh, it's not as if they've been completely out of the acquisition business, right, I mean, because they bought Broun Group. They've also made an offer for about fifty of Riverside Capital Global, Aerospace, premium medical protection, medical liability, mutual insurance. I mean, these

are they making a lot of acquisitions. They're just tiny, right, And I mean there was a large deal um last year when they bought a steak in Flying J Pilot, Flying J the stop company, which I think is a really great deal for brickshere, but down the road they'll be able to buy more of it. Um. It wasn't you know, a fifty billion dollar transaction that's really going to move the needle in the cash, But I think it was something that really matched with their strategy. So

they're definitely active. You know, he has a lot of people working for him that are tasked with looking for deals, and I think there's just a lot of pressure right now, not just because the cash is so high, but because you know, Buffett is turning eighty eight later this month, and you don't want to leave his successor with the challenge of having all this cash and also trying to make investors comfortable with someone other than Buffet running the company.

So I think he can make it a little bit easier for the next in line if he can do something to chip away at that cash with the deal that investors really like. Well, just to note that Flying J acquisition Pilot Flying JA acquisition that was only for about the company right exactly, so they have the option to buy more later on. But yeah, they don't. You know, it's not completely in the Berkshire house. It wasn't you know, the kind of deal that people were looking for, though

I think it was a good one. Do you get the sense that investors in Berkshire Hathaway are eager for warm Buffet to spend the money or are they content to just sit and wait for a big market downturn and see an opportunity evolve. It depends who you ask. I've talked to a few different shareholders in recent weeks and months about this, and I think a lot of them are really patient, and then some other one, some of the younger ones that are looking ahead at you know,

who's going to be running the company. I think they're looking at it from the standpoint that I was saying earlier that you know, it would be really hard for someone other than Buffett to do, would deal of that size. You know, he gets these deal sweeteners because of who he is and because the honor it's it's sort of perceived to be to be acquired by Berkshire. And I don't know if it's going to be that easy for

his successor to to maintain that. So I think from that standpoint and makes sense to do as much as they can now with that money. But it's not as if Berkshire Hathaway is not being opportunistic in actually selling steaks as well. For example, that Philips sixties six divestiture right which some people were also puzzled by that. UM I was interested to see what they were going to do with Kraft Hinds. I think it's getting to the point where I really don't understand why Warren Buffett likes

the stock so much. UM I don't know why Berkshire is still in it. I think that him stepping away from the board, while that was mostly due to him wanting to reduce his travel commitments, I think it could be a precursor to them backing off of Kraft Hinds. I just don't think if it never really did fit the kind of Berkshire investment that we're used to seeing, but he always was able to justify in what way is it because it didn't give them total control? Well?

I think also the strategy you know, Kraft Times is run by three G private equity firm. They're really good at cutting costs and boosting profits. Craft Times became very easily one of the most profitable companies in the food space. But I think, you know, that's kind of maxing out now. They're not really investing for long term growth, even though

they keep talking about it. And I think, you know, Warren Buffett looks long term, and when you look at Kraft Times, I don't know what that long term picture could be. Campbell, right, I mean they could buy Campbell Soup. I don't know that that does much for them. Sure, they could fire a lot of Campbell's people, cut a lot of costs U I'm sure they can make the business leaner, but that's a temporary boost. I think, you know, long term, Campbell Soup does not give them international exposure.

It's almost entirely North America. And then you know, on top of it, it's not a growing business by any means. So I don't know how this really helps them in the long run. Is there a particular industry that you think that Warren Buffett and Berkshire hath to Weigh are focused on. I think they do. Like the consumer staples space.

I think companies with really strong brand names, um, you know, Costco comes up a lot because Costco has this membership that's almost functions like a float, and it's that kind of brand, really strong brand equity that you could see being something almost like the premium that is paid in an insurance in exactly very similar. So I think he could be drawn to that business. Um, companies like Nike have come up. You know, uh, deer always comes up. Steak in Apple Apple. Yes, Um, a lot of industrial

companies fit with the Berkshire strategy. But of course, you know, as we see with Apple, his investing lieutenants could take them a different direction. I mean it seems like they are open to tech or consumer electronics. So I think there's a lot out there. It's just prices the sticking point. Well, right now, the shares of Berkshire Hathaway, the A shares, they are up about five and a half percent so far this year, So I have to wait and see

what happens. Much appreciated Tara la Chapelle are Bloomberg opinion columnists covering deals and that means Berkshire Hathaway as many other companies. And also once again, you can follow Tara on Twitter. Go ahead, I'm gonna let you say at Tara Lash. The last name is too long. Diffit into Twitter handle. It is t A r A l A c H. I'm pim Fox. If you believe technology skills will land you a job with regular pay increases, well you're gonna have to listen to Harley Lippman, the chief

executive and the founder of Genesis ten. This is one of the nation's largest I T services and staffing firms, and he joins US now. Harley Lippman, thanks very much for being with us. So, if you believe that having those tech skills means you're gonna have a great job with regular pay increases, should you rethink that? No, not

at all. Actually, um, even though wages have been flat for quite a while, especially because US big co operations have been able to leverage volume discounts, discounts when they work with vendors, and vendors provide a large number of I professionals, things are going to change. They're actually wages have been bottomed out and they're only going to go up. Well, when you say wages have bottomed out, why have wages in the tech sector been under pressure? Well, UH companies

have been able to keep pressure on UH. As I mentioned a moment ago on vendors who provide I T professionals, they've been able to keep pressure on wages because they could leverage volume business. If you're doing business with a fortune company and you're providing them with I T professionals, they will leverage that will say well, if you have hundreds of people here, we want a really big discount. So they keep the wages low and they keep the

rates low, and vendors have been seeing margin compression. So business for vendors has hasn't been as good as it used to be, but now wages are going to go up the course they're seeing turnover. They need the skills, and especially in emerging technologies if you talk about artificial intelligence, we're really going to see the results of that probably in about five years from now, but until then you're going to need I T professionals to build out the

software to support artificial intelligence. And artificial intelligence simply stated, is the ability to do things on computers that humans were previously doing. So what kinds of specific technology skills are going to be in demand? Well, clearly UM cybersecurity is high up on the list. Analytics, UM, things like DevOps. These are technical terms but there are a lot of skills learning Java, learning Python, uh, that is going to

be in high demand. So things will just change. Even if you learn something in technology and a new emerging one comes about, you could still learn it. So there's always going to be a need for trained I T professionals. Just keep your eye on where the emerging trends are going. Well, you mentioned artificial intelligence. Are there specific types of programming skills that are going to be necessary? Yes, Java and Python.

So for people who are taking computer classes or studying computer science, I'm sure they know that, but those are the two areas to focus on learning Python and Java. There's a big future there. What about the use of H one B visus the ability to attract foreign talent in the United States and technology, Well, the companies have been using H one B visas because that has allowed them to keep wages at a low level. But now companies are not taking people with H one visas because

of the uncertainty. They don't know if the visas will be renewed, they don't know if they could get someone of visa. It's a serious issue now. So we see this among our clients where they want companies to replace the h n D visa people because they don't want them to stay on their premises, get involved in really critical projects, and then their visas are coming out for renewal and they have to go back to their home country and they can't get back because Lego's government will

not renew the visas. Huge uncertainty. And if you and and in technology, you need consistency and stability above all predictability because you have deadlines, you have to get work done. You can't depend on someone who may or may not have to go back to their home country. Now, the kinds of skills that you describe, software engineering, application development, as well as app support and quality assurance, where are

people getting the skills in order to do that? Are they getting that from university programs or is that something that they have to then go out and get more specialized consideration a little bit of both. You know, after the the big recession of two thousand eight, American companies by and large cut training, so people now have to

get that on their own. There's a big gap now, and that presents real opportunity for people who really want to get into the tech sector because that they could get some training and there are vendors that provide it, like we do a Genesis Tent. We provide training and we provide domestic outsourcing. So that's what people could get trained. So if they could get that training on their own a little bit or through a vendor like Genesis Tent, then they could take that and leverage that they could

get very good jobs at companies. Now you mentioned artificial intelligence, what about robotics. Is that also an area that should be trained for now? Oh? Yeah, that's the future of costs robotics AI. That's the super hot area. But it's not there yet. So a lot of people are are

getting caught up in this. And while it's important to learn the skills as I ment and earlier learning Java, learning Python will put you in a strong position for artificial intelligence to your good points, it's also for robotics very it's basically the same thing. Now there's a geographic element to this as well, Is there not you're headquartered in New York, you have operations in Miami Beach. Is there a geographical tilt towards the coasts in terms of

where the talent is not at all? All over the Hinded States and all over the world, Technology moves at such speed that it's needed everywhere. It's needed in Des Moines, Minneapolis, Milwaukee, Kansas City, Dallas, Atlanta. There's no one hub that is using it, no one else is. The world is indeed flattened that way, So it doesn't matter really where you are, and that's the beauty of technology. Like like you know, cell phones, emails, text, WhatsApp could be anywhere in the

world and communicate. It's the same thing with these technology skills. But aren't costs related to geographic is is? Yes, you're quite right on that. So a lot of companies are looking to have more work done in lower cost areas in the United States, the Midwest in particular, where that's also rich in talent. But at the same time, there are companies that have headquarters in major cities like New York City, Atlanta, Dallas, and they need people there. So

it's a bit of a blend. You'll have some work being done on shore but off site, as we say, and you'll have work being done at the corporate headquarters, which will be in the big cities. Now, Harley, just give you about twenty seconds here. Employers around the United States they posted more than three hundred thousand tech jobs. This is in the month of May, for example, but yet they only filled under nine thousand of those jobs. What's the biggest lack of tech savvy jobs that are available?

What's the biggest vacuum here? It's it's interesting. I know it's a it's a bit odd, isn't it. But I'll given that there's a shortage, and you know, the unemployment rate continues to go down to record levels and they're not hiring basically because employers are looking for everything. If they want fifteen things that someone has and you present them with with twelve or thirteen, they may not take them.

They'll send the work off shore. It's just kind of an easy but a false reaction and decision on their part. It's got It'll catch up to them. Thanks very much. Harley Lippman is the chief executive and the founder of Genesis ten. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on

Twitter at Lisa Abramo. It's one before the podcast You can always catch us worldwide on Bloomberg Radio.